ACAT ATP common mistakes
ACAT ATP · Understand the traps and how to avoid them.
Treating the personal allowance and the basic rate band as the same number when computing tax on earned income, so the wrong amount is taxed at 20%.
Candidates memorise one headline figure and apply it to both the deduction and the band, especially where the allowance is restricted for high earners.
What to do instead
Build a two-line working every time: first deduct the allowance to get taxable income, then slice that taxable income into bands. Write the two figures separately at the top of the computation before doing any arithmetic.
Applying the savings nil-rate band or dividend nil-rate band to the wrong income type, or stacking it in the wrong order against non-savings income.
The nil-rate bands look similar in size and candidates conflate them, and they forget that income is taxed in a fixed order (non-savings, then savings, then dividends).
What to do instead
Before computing, list the three income columns and total each. Then apply bands strictly left to right across that fixed order, labelling each slice with its rate. Never compute savings or dividend tax until the non-savings slice has consumed its share of the basic rate band.
Missing the allowance restriction for income above the taper threshold, or computing the restriction as a percentage of total income rather than as a reduction of the allowance.
The rule is a reduction of the allowance by a fixed amount per unit of excess income, and candidates instinctively apply a percentage to income instead.
What to do instead
Write the formula explicitly as: excess income over the threshold, divided by the specified step, multiplied by the reduction per step, then subtract from the full allowance and floor the result at zero. Check the answer is a reduced allowance, not a reduced income figure.
Ignoring the annual exemption and the chargeable-gain computation order on disposals, or netting losses against the wrong year.
Candidates jump straight to proceeds minus cost and forget the exemption, current-year losses, brought-forward losses, and the interaction with the annual exemption limit.
What to do instead
Use a fixed six-step template for every disposal: proceeds, less allowable cost, less current-year losses, less brought-forward losses, less annual exemption, apply rate. Do not deviate from the template order.
Confusing the relief available on a pension contribution with the relief available on a gift-aid donation, particularly for higher-rate taxpayers.
Both involve extending the basic rate band or giving relief at source, and candidates mix up which mechanism applies to which payment.
What to do instead
Learn one distinguishing sentence for each: pension contributions made net extend the band by the grossed-up amount; gift aid extends the band by the grossed-up donation. Then practise stating, for each, what the provider reclaims and what the taxpayer reclaims.
Applying the wrong basis of assessment to a source of income, for example treating rental or trading profits on a cash basis when the accruals or statutory basis is required.
Candidates learn one basis rule and generalise it across all income sources without checking which source it belongs to.
What to do instead
Build a one-page table mapping each income source to its basis period and accounting basis, and consult it before starting each computation. State the basis in words at the top of the answer.
Giving advice or acting on a client's behalf beyond the scope of the engagement without confirming competence or referring on.
Candidates want to be helpful and answer the question asked, forgetting that professional duties include recognising the limits of their own competence.
What to do instead
Adopt a standing habit: before advising, ask whether the matter falls within the engagement and within your competence. If not, the correct answer is to decline, document, and refer. Practise spotting the word 'should' in ethics questions and testing it against the duty to refer.
Failing to identify a conflict of interest, or identifying it but continuing to act without disclosure and consent.
Conflicts are often subtle, arising between two clients or between the adviser and the client, and candidates focus on the technical outcome rather than the relationship.
What to do instead
Run a three-question check on every scenario: who are the parties, does acting for one harm the other, and has informed consent been obtained and recorded? If any answer is unclear, the correct action is to disclose and obtain consent before proceeding.
Breaching confidentiality by disclosing client information without lawful authority, or failing to recognise a permitted disclosure.
Candidates either treat confidentiality as absolute or assume any request from an authority justifies disclosure, missing the need for a legal basis or client consent.
What to do instead
Learn the closed list of permitted disclosures (client consent, legal obligation, public interest in limited circumstances) and apply it as a checklist. If a disclosure does not fit a listed category, the answer is to refuse or seek advice.
Mishandling client money, deadlines or records, such as missing a filing date or failing to keep adequate records of advice given.
Candidates treat procedural obligations as administrative background rather than as professional duties with consequences, so they under-weight them in scenario questions.
What to do instead
For any procedural scenario, ask three questions in order: was the deadline met, was the money handled through the proper channel, and is there a contemporaneous record? Treat a 'no' to any of these as the decisive issue in the answer.